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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Summary of Carrying Value and Estimated Fair Value of Financial Instruments

A summary of the carrying value and estimated fair value of our financial instruments at September 30, 2020 and December 31, 2019 is as follows:


	September 30, 2020				December 31, 2019
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Available-for-sale securities	$	1,717,047	$	1,717,039	$	1,719,607	$	1,719,607
Trading securities	14,811		14,811		15,256		15,256
Equity securities	198,791		198,791		299,203		299,203
Mortgage loans	48,977		47,733		43,992		42,448
Other long-term investments	62,903		62,903		78,410		78,410
Short-term investments	175		175		175		175
Cash and cash equivalents	99,604		99,604		120,722		120,722
Corporate-owned life insurance	7,670		7,670		6,777		6,777

Summary of Financial Instruments Measured at Fair Value on Recurring Basis

The following tables present the categorization for our financial instruments measured at fair value on a recurring basis. The table includes financial instruments at September 30, 2020 and December 31, 2019:


September 30, 2020			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	54,599	$	—	$	54,599	$	—
U.S. government agency	64,960		—		64,960		—
States, municipalities and political subdivisions
General obligations
Midwest	83,978		—		83,978		—
Northeast	30,550		—		30,550		—
South	110,585		—		110,585		—
West	109,947		—		109,947		—
Special revenue
Midwest	134,841		—		134,841		—
Northeast	62,844		—		62,844		—
South	238,350		—		238,350		—
West	143,102		—		143,102		—
Foreign bonds	28,018		—		28,018		—
Public utilities	84,302		—		84,302		—
Corporate bonds
Energy	27,501		—		27,501		—
Industrials	43,057		—		43,057		—
Consumer goods and services	49,028		—		49,028		—
Health care	7,569		—		7,569		—
Technology, media and telecommunications	41,571		—		41,571		—
Financial services	102,459		—		102,209		250
Mortgage-backed securities	14,529		—		14,529		—
Collateralized mortgage obligations
Government national mortgage association	77,197		—		77,197		—
Federal home loan mortgage corporation	121,676		—		121,676		—
Federal national mortgage association	85,449		—		85,449		—
Asset-backed securities	935		—		—		935

Total Available-for-Sale Fixed Maturities	$	1,717,047	$	—	$	1,715,862	$	1,185
TRADING
Fixed maturities:
Bonds















Corporate bonds

Industrials	$	2,004	$	—	$	2,004	$	—
Consumer goods and services	1,171		—		1,171		—
Health care	4,965		—		4,965		—

Financial services	1,622		—		1,622		—


Redeemable preferred stocks	5,049		5,049		—		—
Total Trading Securities	$	14,811	$	5,049	$	9,762	$	—
EQUITY SECURITIES
Common stocks
Public utilities	$	16,344	$	16,344	$	—	$	—
Energy	8,833		8,833		—		—
Industrials	30,935		30,935		—		—
Consumer goods and services	31,432		31,432		—		—
Health care	24,646		24,646		—		—
Technology, media and telecommunications	16,003		16,003		—		—
Financial services	63,957		63,957		—		—
Nonredeemable preferred stocks	6,641		6,046		—		595
Total Equity Securities	$	198,791	$	198,196	$	—	$	595
Short-Term Investments	$	175	$	175	$	—	$	—
Money Market Accounts	$	54,590	$	54,590	$	—	$	—
Corporate-Owned Life Insurance	$	7,670	$	—	$	7,670	$	—
Total Assets Measured at Fair Value	$	1,993,084	$	258,010	$	1,733,294	$	1,780


December 31, 2019			Fair Value Measurements
Description	Total		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities:
Bonds
U.S. Treasury	$	69,491	$	—	$	69,491	$	—
U.S. government agency	100,202		—		100,202		—
States, municipalities and political subdivisions
General obligations
Midwest	88,594		—		88,594		—
Northeast	31,270		—		31,270		—
South	115,203		—		115,203		—
West	110,317		—		110,317		—
Special revenue
Midwest	139,892		—		139,892		—
Northeast	61,543		—		61,543		—
South	234,666		—		234,666		—
West	144,844		—		144,844		—
Foreign bonds	5,117		—		5,117		—
Public utilities	63,651		—		63,651		—
Corporate bonds
Energy	30,124		—		30,124		—
Industrials	54,015		—		54,015		—
Consumer goods and services	49,466		—		49,466		—
Health care	9,480		—		9,480		—


Technology, media and telecommunications	27,670		—		27,670		—
Financial services	100,253		—		100,003		250
Mortgage-backed securities	6,356		—		6,356		—
Collateralized mortgage obligations
Government national mortgage association	80,356		—		80,356		—
Federal home loan mortgage corporation	124,502		—		124,502		—
Federal national mortgage association	71,845		—		71,845		—
Asset-backed securities	750		—		—		750

Total Available-for-Sale Fixed Maturities	$	1,719,607	$	—	$	1,718,607	$	1,000
TRADING
Fixed maturities:
Bonds















Corporate bonds


Consumer goods and services	$	2,276	$	—	$	2,276	$	—
Health care	4,701		—		4,701		—
Technology, media and telecommunications	1,732		—		1,732		—
Financial services	2,460		—		2,460		—






Redeemable preferred stocks	4,087		4,087		—		—
Total Trading Securities	$	15,256	$	4,087	$	11,169	—
EQUITY SECURITIES
Common stocks
Public utilities	$	16,295	$	16,295	$	—	$	—
Energy	14,639		14,639		—		—
Industrials	57,330		57,330		—		—
Consumer goods and services	29,935		29,935		—		—
Health care	27,285		27,285		—		—
Technology, media and telecommunications	19,265		19,265		—		—
Financial services	127,780		127,780		—		—
Nonredeemable preferred stocks	6,674		6,079		—		595
Total Equity Securities	$	299,203	$	298,608	$	—	$	595
Short-Term Investments	$	175	$	175	$	—	$	—
Money Market Accounts	$	9,334	$	9,334	$	—	$	—
Corporate-Owned Life Insurance	$	6,777	$	—	$	6,777	$	—
Total Assets Measured at Fair Value	$	2,050,352	$	312,204	$	1,736,553	$	1,595

Summary of Quantitative Information About Level 3 Fair Value Measurements

The following table provides a quantitative information about our Level 3 securities at September 30, 2020:

Quantitative Information about Level 3 Fair Value Measurements

Fair Value at

Valuation Technique(s)

Unobservable inputs

Range of weighted average significant unobservable inputs

September 30, 2020

Corporate bonds - financial services

250

Fair value equals cost

Fixed Maturities asset-backed securities

935

Discounted cash flow

Probability of default

4% - 6%

Nonredeemable preferred stocks

595

Discounted cash flow

Multiplier

3x - 4x

Changes in Fair Value of Level 3 Securities

The following table provides a summary of the changes in fair value of our Level 3 securities for the three-month period ended September 30, 2020:


	Corporate bonds		Asset-backed securities		Equities		Total
Balance at June 30, 2020	$	250	$	927	$	595	$	1,772

Net unrealized gains(1)	—		8		—		8





Balance at September 30, 2020	$	250	$	935	$	595	$	1,780

(1) Net unrealized gains are recorded as a component of comprehensive income.

The following table provides a summary of the changes in fair value of our Level 3 securities for the nine-month period ended September 30, 2020:


	Corporate bonds		Asset-backed securities		Equities		Total
Balance at January 1, 2020	$	250	$	750	$	595	$	1,595

Net unrealized gains(1)	—		185		—		185





Balance at September 30, 2020	$	250	$	935	$	595	$	1,780

(1) Net unrealized gains are recorded as a component of comprehensive income.

Summary of Carrying Value of Commercial Mortgage Loans by Loan-to-Value Ratio

The following tables present the carrying value of our commercial mortgage loans and additional information at September 30, 2020 and December 31, 2019:


Commercial Mortgage Loans
	September 30, 2020		December 31, 2019
Loan-to-value	Carrying Value		Carrying Value
Less than 65%	$	30,467	$	34,024
65%-75%	17,342		8,496
Total amortized cost	$	47,809	$	42,520
Allowance for mortgage loan losses	(76)		(72)
Mortgage loans, net	$	47,733	$	42,448


Mortgage Loans by Region
	September 30, 2020				December 31, 2019
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
East North Central	$	3,245	6.8	%	$	3,245	7.6	%
Southern Atlantic	9,794		20.5		7,026		16.5
East South Central	8,238		17.2		8,358		19.7
New England	6,588		13.8		6,588		15.5
Middle Atlantic	14,971		31.3		15,076		35.5
Mountain	2,227		4.6		2,227		5.2
West North Central	2,746		5.8		—		—
Total mortgage loans at amortized cost	$	47,809	100.0	%	$	42,520	100.0	%


Mortgage Loans by Property Type
	September 30, 2020				December 31, 2019
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
Commercial
Multifamily	$	17,051	35.6	%	$	11,741	27.6	%
Office	11,932		25.0		11,848		27.9
Industrial	10,124		21.2		10,124		23.8
Retail	2,227		4.7		2,227		5.2
Mixed use/Other	6,475		13.5		6,580		15.5
Total mortgage loans at amortized cost	$	47,809	100.0	%	$	42,520	100.0	%

Summary of Amortized Cost Basis by Year of Origination and Credit Quality Indicator


Amortized Cost Basis by Year of Origination and Credit Quality Indicator
	2020		2019		2018		Total
Commercial mortgage loans:
Risk Rating:
1-2 internal grade	$	5,551	$	8,404	$	18,770	$	32,725
3-4 internal grade	—		8,496		6,588		15,084
5 internal grade	—		—		—		—
6 internal grade	—		—		—		—
7 internal grade	—		—		—		—
Total commercial mortgage loans	$	5,551	$	16,900	$	25,358	$	47,809
Current-period write-offs	—		—		—		—
Current-period recoveries	—		—		—		—
Current-period net write-offs	$	—	$	—	$	—	$	—

Summary of Rollforward of Allowance for Mortgage Loan Losses

As of September 30, 2020, the Company had an allowance for mortgage loan losses of $76, summarized in the following rollforward:


Rollforward of allowance for mortgage loan losses:
	As of
	September 30, 2020
Beginning balance, January 1, 2020	$	72
Current-period provision for expected credit losses	4
Write-off charged against the allowance, if any	—
Recoveries of amounts previously written off, if any	—
Ending balance of the allowance for mortgage loan losses, September 30, 2020	$	76